Consumers can claim compensation of up to £48,000 if they have lost money as a result of dealings with any one of 34 financial services firms.
The move comes after the firms were declared ‘in default’ by the Financial Services Compensation Scheme (FSCS).
FSCS does this if it finds a firm – such as a financial adviser – can’t pay claims against it.
So, for example, if you were mis-sold an endowment policy and subsequently lost money, you should be able to claim against the firm which sold it.
But if that firm can’t pay – and is regulated by the Financial Services Authority – it can be declared in default.
This means customers who have lost money might then be able to make a claim for compensation to FSCS. However, this will depend on when the investment was sold.
FSCS Chief Executive Loretta Minghella said: ‘It is important that consumers know that FSCS may be able to help if the firm they dealt with can’t help.
‘The existence of a fund of last resort for consumers maintains confidence in the sector and provides help to individuals who have suffered a financial loss who otherwise wouldn’t have anywhere to turn.’
FSCS can deal with complaints about investments sold on or after 28 August 1988. Since 31 October 2004 it can also deal with mortgage complaints, and since 14 January 2005 with complaints relating to general insurance.
This pdf, below, details all 34 investment firms recently declared in default.
Consumers who believe they may have a claim should contact FSCS on 020 7892 7300, or by email at firstname.lastname@example.org.
Which? money expert Teresa Fritz said: ‘The Financial Services Compensation Scheme is a valuable safety net for consumers let down by their financial advisers. If you have made a loss because of bad financial advice, but your adviser has gone out of business, it’s always worth checking if the FSCS can take on your case.’
FSCS default declarations (PDF: 80Kb)
22 January 2008